Cost/schedule performance measurement without work packages

Brookhaven National Laboratory

To fully comply with the Cost/Schedule Control System Criteria (C/SCSC), per DOD 7000.2, detailed work packages must be planned to obtain the required performance measurement data: Budgeted Cost of Work Scheduled (BCWS), Budgeted Cost or Work Performance (BCWP), and Actual Cost of Work Performed (AC.WP).

This paper describes a simple technique for various size organizations, departments, projects, tasks, etc., to use the latest Government required performance measurement discipline without fully meeting the listed criteria. The technique is particularly adaptable to the Cost/Schedule Status Report (C/SSR) where detailed work packages are not required but performance measurement data (BCWS, BCWP and ACWP) and calculated cost and schedule variances are required cumulatively each month.

As a review, the definition of the performance measurement data as described in DOD 7000.2 is shown below:

BCWS — The sum of budgets for all work packages, planning packages, etc., scheduled to be accomplished (including in-process work packages), plus the amount of level of effort and apportioned effort scheduled to be accomplished within a given time period.

BCWP — The sum of the budgets for completed portions of open work packages, plus the appropriate portion of the budgets for level of effort and apportioned effort.

ACWP — The costs actually incurred and recorded in accomplishing the work performed within a given time period.

The “No-Work Package” technique to be used shall be described in detail; however, certain normal Program Management requirements are still necessary. These requirements are as follows:

  1. A monthly time-phased, schedule related, spending plan which includes material pay-offs or commitments, depending on the nature of the scheduled events or activities within the schedule system.
  2. A schedule system (PERT, CPM, Gantt, etc.) showing planned monthly milestones.
  3. An accounting system fully related to the spending plan and scheduled activities. As required, the accounting system should correlate with any or all of the following: Organization Code, Work Breakdown Structure (WBS) Code or Functional Code.

The normal technique of developing BCWS and BCWP performance measurement parameters requires that the BCWS plan be a summarization of all dollar values assigned to the respective milestones. A simple example is shown in Figure 1:

With the use of manpower plans, hourly projections, or other standard unit techniques, the milestone values are calculated as Ml =$400, M2=$400, M3=$1200

Work Package Plan

Figure 1. Work Package Plan

Upon achievement of the milestone appropriate “credit” as planned would be taken as BCWP.

At the end of one month, if milestones Ml and M2 were achieved in accordance with the schedule, the schedule and cost variances would be calculated as follows:

BCWS = 800 (cumulative at 2 months)

BCWP = 800 (cumulative at 2 months)

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As can be seen by the simple example described, BCWS is established first, BCWP is arrived at upon status determination; schedule variances are calculated and actual costs are accumulated and compared against BCWP for cost variances.

Assuming hundreds or thousands of work packages per system or per WBS element, the calculations are made for each and summarized to a summary reporting level.

One must keep in mind that the schedule variance in terms of dollars or percentage is not an exact indicator of schedule problems in terms of useful program management requirements such as days, weeks or months. The variance is a useful tool for trending analysis, but one must retain a reliable schedule system for actual calendar slippage impact.

Before we enter the discussion of a simplified technique for using performance measurement parameters to calculated cost and schedule variances, let us summarize in step the normal chronological order used in C/SCSC and C/SSR reporting.

Table 1

  1. Plan BCWS in Dollars
  2. Determine BCWP Status in Dollars
  3. Calculate Schedule Variance in Dollars
  4. Accumulate Actual Cost
  5. Calculate Cost Variance

The simplified technique to be described is a departure from the steps shown above and is based on the premise that having a good schedule system and knowing the schedule impact in actual calendar units, let the cost variance be somewhat subjective and retain the exactness of the schedule variance.

Let us now reverse some of the steps in Table 1 and show how the simplified performance measurement system without work packages will give the required variance trending data.

Table 2

  1. Plan BCWS in Dollars
  2. Obtain Schedule System + Slack in Calendar Units
  3. Accumulate Actual Cost
  4. Calculate Cost Variance
  5. Calculate Cost Variance

Note the difference in steps 2 and 3 in the two tables. Now we are using actual calendar units of slack (Step 2) to calculate BCWP (Step 3). In Table 1 we determined a possible subjective value of BDWP to calculate the schedule variance, which must then be evaluated as to the actual calendar unit impact

Assuming a WBS, as shown in Figure 2, reflects the system reporting requirements at Level 3, the following example shall follow the steps of Table 2.

  1. Using standard manpower and material planning techniques, develop the cost curve related to the functional schedules (assume PERT/CPM). BCWS and related schedule is shown in Figure 3. This is not PERT/Cost but simply reflects the spending plan of the organizational unit planning to achieve the network activities or events as shown
    BCWS/Schedule WBS Element 1A

    Figure 3. BCWS/Schedule WBS Element 1A

    Cost/Schedule Variance Trend

    Figure 4. Cost/Schedule Variance Trend

  2. PERT/CPM output for WBS Component 1 =−2weeks slack
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4. Actual Cost = 24K (assumed)

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It should be noted that a reference schedule baseline has to be established for positive slack paths. For example, one cannot call +10 weeks slack good performance if the previous positive slack was +15 weeks. Using a +10 week slack in the above technique would show a good schedule and favorable cost variance due to a good calculated BCWP. If a baseline had been established for the +15 week slack for a particular system component, all calculations would be made on a -5 week schedule slippage. This is essential for good management visibility and control since the manpower resources and cost might not extend throughout the original +15 week slack period and, therefore, the 5 week slip would indicate a cost overrun. A typical Cost/Schedule Variance Trending Chart is shown in Figure 4.

In conclusion, the following list summarizes the advantages of the “No-Work Package” performance measurement technique and when it could be used.

  1. Use when full C/SCSC is not required — C/SCSC requires detailed work packages, and BCWP status based on predetermined dollar amounts for each milestone.
  2. Use for C/SSR — No work packages required. BCWP methodology must be explained.
  3. Utilizes organization schedule system and actual schedule performance data. Slack is based on calendar units for activities or events.
  4. Alleviates supervisors from having two schedule systems — work packages and standard organization technique.
  5. Retains good trending data for both cost and schedule variances.
  6. Meets intent of Government C/SSR reporting requirements, using performance measurement parameters BCWS, BCWP and ACWP.

REFERENCES

Department of Defense Instruction (DODI) 7000.2 Performance Measurement for Selected Acquisitions Enclosure 1 — Cost/Schedule Systems Criteria.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

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